Thousands of working parents are being urged to check whether they are missing out on a Government scheme that could slash their bills by almost £100 a month. HM Revenue & Customs (HMRC) is reminding families to sign up for Tax-Free Childcare, saying the average household using the scheme saves close to £100 every month.
How the scheme works
The tax break can be used to help pay for nurseries, childminders, breakfast clubs, after-school clubs and holiday clubs, providing valuable support during the summer holidays and throughout the school year. Eligible families can receive up to £2,000 a year per child, rising to £4,000 for a disabled child, by opening a Tax-Free Childcare account.
Under the scheme, the Government adds £2 for every £8 paid into the account – effectively giving parents a 25% boost towards approved childcare costs. Families can receive up to £500 in Government top-ups every three months for each child, or £1,000 every three months if the child is disabled.
Growing take-up
HMRC said almost 75,000 childcare providers are now registered to accept Tax-Free Childcare payments. New figures also show growing numbers of parents with older children are taking advantage of the scheme. The number of families using Tax-Free Childcare for children aged eight and over has increased by more than 20% compared with a year earlier.
Myrtle Lloyd, HMRC's Chief Customer Officer, said: "Tax-Free Childcare can help with your summer childcare plans and, looking to the term ahead, with whatever type of care you require for your child. If you haven't signed up already, do it today so you don't miss out. Go to GOV.UK and search 'Tax-Free Childcare'."
Eligibility and flexibility
Parents can pay money into their account and use it immediately or leave it there until childcare bills arise. Any unused money can also be withdrawn. Working families may qualify if they have a child aged 11 or under (or under 16 if the child is disabled), each parent earns at least the equivalent of 16 hours a week at the National Minimum or Living Wage on average, neither parent earns more than £100,000 a year, and they are not receiving Universal Credit or childcare vouchers.
The scheme can also be used alongside the Government's funded childcare hours, provided families meet the relevant eligibility rules. The latest reminder comes as childcare costs remain one of the biggest pressures on household budgets, with many parents relying on holiday clubs and wraparound care during the school holidays.
Check before the new term
HMRC is encouraging anyone who thinks they may qualify to check their eligibility before the new school term begins. More information can be found on the GOV.UK website.
